The Bank had a net profit of $133,000 for the quarter ended September 30, 2014, as compared to $133,000 for the quarter ended June 30, 2014, and $93,000 for the quarter ended September 30, 2013. There was a $15,000 provision for loan and OREO losses for the quarter ended September 30, 2014, as compared to $66,000 for the quarter ended June 30, 2014 and $3,000 for the same quarter last year.

On a year-to-date basis, the Bank had a net profit of $329,000, as compared to $208,000 for the same period last year. Actual net profit for the nine month period ended September 30, 2013 was $558,000, but included a $700,000 income tax benefit, which was partially offset by a $350,000 additional provision for OREO write down. There was an $81,000 provision for loan and OREO losses for the nine month period ended September 30, 2014, as compared to $117,000 (net of the $350,000 mentioned above) for the same period last year.

The annualized return on average assets for the quarter ended September 30, 2014 was 0.78%, as compared to 0.81% for the quarter ended June 30, 2014, and 0.56% for the quarter ended September 30, 2013, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.

The annualized return on average assets for the nine month period ended September 30, 2014 was 0.66%, as compared to 0.42% for the same period last year, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.

The annualized return on average equity for the quarter ended September 30, 2014 was 7.16%, as compared to 7.31% for the quarter ended June 30, 2014 and 3.90% for the quarter ended September 30, 2013, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.

The annualized return on average equity for the nine month period ended September 30, 2014 was 5.91%, as compared to 4.09% for the same period last year, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.

Earnings per share for the quarter were $0.08 ($0.32 annualized) and year-to-date was $0.19 ($0.25 annualized) based on 1,736,451 shares outstanding.

Tier 1 leverage capital was 10.32% as of September 30, 2014, as compared to 10.00% as of December 31, 2013. Total Risk-Based Capital was 14.93% as of September 30, 2014, as compared to 14.46% at December 31, 2013.

Stockholders' Equity to assets at September 30, 2014 was 10.79% as compared to 10.71% at December 31, 2013.

Book value per share was $4.27 as of September 30, 2014, based on 1,736,451 shares outstanding.

Total assets increased $2.6MM to $68.7MM at September 30, 2014, as compared to $66.1MM at December 31, 2013.

Cost of funds at September 30, 2014 was 0.61%, as compared to 0.62% at June 30, 2014 and 0.74% at September 30, 2013.

The net interest margin (interest income less interest expense divided by average earning assets) decreased to 3.61% for the quarter ended September 30, 2014, as compared to 4.13% for the quarter ended June 30, 2014, and 3.87% for the quarter ended September 30, 2013. The quarter ended June 30, 2014 included interest income on one large loan that had been deferred, but was recorded to income when it was paid off.

Loan loss reserves to total loans were 2.84% ($1.3MM) at September 30, 2014, as compared to 3.41% ($1.6MM) at December 31, 2013.

Total liquidity as of September 30, 2014 was 23.77%, and available liquidity was 23.77%.

Non-performing assets decreased $600,000 during the quarter to $4.3MM at September 30, 2014, as compared to $4.9MM at June 30, 2014.

President and Chief Executive Officer Jim Salisbury stated "I am pleased that for two consecutive quarters, earnings have been $133,000 per quarter. Our mortgage loan fee income continues to be strong due to historically low interest rates and continued construction loan and home purchase activity. While gross loans have increased only $1.0MM year to date, this growth has occurred in spite of substantial loan payoffs during such period. Accordingly, the growth is more significant than might seem evident, and is due to our successful efforts to improve asset quality. Non-performing assets decreased $600,000 to $4.3MM at September 30, 2014, down from $4.9MM at June 30, 2014. The non-performing assets of the Bank are all "legacy assets" that were originated over five years ago. The Bank continues to work diligently to resolve their non-performing status. Our focus continues to be growing the Bank once again by increasing loan production, which will increase net interest income and loan related fee income. This is evidenced by the $1.0MM net increase in gross loans during the year. It continues to be a challenge to have increases in the gross loans of the Bank while troubled loans are brought to a resolution and paid off. Our net interest margin remains strong at 3.61%, complemented by a 2.84% loan loss reserve to total loans and a continued reduction in the Bank's cost of funds of 17.6% year over year. The reduction in cost of funds has slowed in 2014 due to fewer higher rate certificates of deposit maturing.

Total assets increased $2.6MM to $68.7MM at September 30, 2014, as compared to $66.1MM at December 31, 2013. Cash and cash equivalents increased $1.8MM and gross loans increased $1.0MM, while other assets decreased $200,000. I am pleased with the continued change in our mix of deposits. Total deposits increased $2.2MM to $57.5MM at September 30, 2014, as compared to $55.3MM at December 31, 2013. Our all-important transaction accounts have increased 20.2% since December 31, 2013.

The Bank believes at this time that its reserve for loan losses is sufficient and that no additional provision for loan loss reserves is currently required. There could be additional charges related to foreclosed property if certain appraisals would indicate the need for additional write downs of these assets.

Twenty four cents of every dollar is held in domestic liquid assets to cushion the Bank from a rising interest rate environment and to allow for the funding of new loans. In addition, the investments that the Bank owns have very short term maturities, which will not fluctuate significantly in market value should interest rates increase. The current interest rate environment does not reward the Bank for having this relatively high liquidity position because earnings are minimal on these investments. Given the many uncertainties with the economy, the continued gradual ending of the Federal Reserve's Quantitative Easing program in 2014, the massive Federal deficits and current strained political situation in Washington D.C., such position is analogous to a form of "insurance" that the Bank is willing to incur at this time to continue to improve its financial condition. In addition, the Bank is resisting the temptation to reach for higher yields on assets with extended maturities until it is comfortable with the true direction of interest rates."

For more information regarding this release, or the Bank in general, you may contact James A. Salisbury, President and CEO, at 406-543-8700.

About Treasure State Bank

Treasure State Bank, a Montana chartered community bank, is headquartered in Missoula, Montana. The Bank was founded in January 2007. Treasure State Bank currently trades on the OTCBB under the ticker symbol "TRSU". Treasure State Bank serves businesses, professionals, non-profit organizations and individuals through customized banking services and products. For more information, please visit www.treasurestatebank.com.